Marketing, revenue management need a collaborative approach

NATIONAL REPORT—A hotel operation needs to be a well-oiled machine, with all departments and stakeholders seamlessly working together. This is especially true when it comes to the profitability of the business. Traditionally, the hotel sales, marketing and revenue management disciplines have existed in silos, working side by side but not necessarily together—and it’s becoming increasingly clearer that needs to change.

“We’re in the middle of a perfect storm as it relates to increasing acquisition costs,” said Andressa Chapman, principal of Trigger Hotel Marketing. “They continue to climb, and we also see occupancy mix for hotels evolving. Group room nights as part of a hotel’s total occupancy mix have steadily declined over the last decade, while transient room nights are making up for that decline and then some.

“I sat in on an STR presentation a couple of weeks ago, and was pretty surprised to see that among upper- and luxury-class resorts, there’s a gap between total transient and group room nights; in 2006, it was a little under 17%; as of August of this year, that gap had increased to almost 33%,” she continued. “It was widened primarily due to increases in Friday and Saturday night stays, leisure transient. Those room nights are not only less cost efficient to service, but the costs for acquiring those room nights are skyrocketing. Hoteliers know they need to find another way forward.”

When revenue managers and marketers work in tandem, hotels can maximize their results, an increasingly critical goal in an era of hospitality that has seen more competition than ever. Disconnects between the two groups don’t just cause confusion—this can mean real-world revenue hits for a hotel.

Lily Mockerman, president and CEO of Total Customized Revenue Management (TCRM), said, “There’s so much focus now on revenue management with profitable strategies and optimal mix, but if we’re not communicating back and forth with marketing, they may be putting out an occupancy-driven offer when we’re currently working on shifting mix to get better rate. Or they might put out an occupancy offer in a high-demand period, or a rate-driven offer or no offer in a low-demand period, and none of those things align. We find that when revenue management and marketing aren’t hand-in-hand from the get go, revenue management, in particular, forgets to pass some information on to marketing that helps them do their job. Some marketers are also hesitant to ask questions of the revenue manager, feeling like they’re more in a creative role, but really, both are in a strategic role, and it’s important that those two strategies align.”

Lily Mockerman,Total Customized Revenue Management

One way to do that is with transparency with data. “Revenue management has access to a ton of data that marketing doesn’t automatically have access to because we don’t have PMS logins, etc.,” Chapman said. “Likewise, marketing has access to all of the booking engine data that helps us with what promotions are working, where are people spending time on the website, what social promotions are working.”

One of the biggest challenges, they said, is the industry is not structured for this type of collaborative relationship. “We’re still structured like it’s 1999,” Chapman said. “For a lot of properties, we continue to work with the old model of one sales director and one revenue director for each property, or these two resources shared among a few properties. Those properties are operating without someone with an actual marketing background or skillset at the property level. I’m not talking about someone who can create flyers or host media or track down chefs for a photo of a dish for a press opportunity, but someone who can take a business goal, put together a comprehensive marketing strategy against that business goal, execute that plan using all of the marketing tools and resources available to them, and then provide an analysis of the results against the business goal.”

Chapman added that the sales and revenue directors are often “controlling a large chunk of the expense budget and handling marketing tasks that are meant to drive awareness and immediate revenue, but those tasks often—because these two individuals are time poor and a lot of these tasks are a little outside of their wheelhouse—tend to go to the bottom of a really long list, so marketing doesn’t get the attention it needs at the property level.”

Another challenge with the structure, she said, is the two disciplines aren’t incentivized the same way. “When our areas don’t share common goals, we really have no incentive to work together,” she said. “Not only does this sustain those silos, but it has the unintended consequence of creating a closer working relationship between the property’s revenue director and an OTA market manager. There’s a disconnect between our words and our actions when it comes to OTAs in the industry. On a large, holistic level, we vilify the OTAs, but on a private level, we embrace them. There’s opportunity there to create more collaboration through our incentives.”

Mockerman added that many in the industry need to understand marketing better. “I think the industry still thinks it is about creating flyers, and so a lot of people are hiring people who can put together creative pieces, and that’s really not what it’s about at this stage in the industry,” she said. “Sure, you need someone who can do that, but overall, it’s about strategy. The industry needs to evolve into a position where they’re referring to it not as a marketing director but a marketing strategist. That more accurately describes where we need to go as an industry.”

Finding that talent isn’t always easy. “To hire someone sounds simple, but it’s not, because there’s a lack of marketing talent who understands the strategic goal,” Mockerman said. “People who feel like they are very strategic gravitate toward sales and revenue management because marketing isn’t portrayed that way. There’s a broader opportunity within the industry and organizations like HSMAI to really educate about opportunities to be strategic in a marketing career, and encourage people to pursue it in their studies. As we’re seeing the vast need for this, we’re going to come up against a wall of lack of talent and availability of talent. That’s something we need to start solving for today.”

Chapman agreed. “I presented at the HSMAI revenue conference this summer and in preparing for it, I called some of the top universities in the country known for their hospitality programs. I asked, ‘How do you teach hospitality marketing to undergrads?’ It was astonishing to me,” she said. “They train them to think it’s about pricing and distribution… A lot of it has to start with education. I feel like universities are not teaching that yet because there’s not yet a demand coming from the industry for that.”

Mockerman added that she’s seen hotel companies find success with marketers who got their start outside of the industry “where the education is more holistic in a general marketing degree than it would be for hospitality specifically.” HB